What is the Basic Payment Scheme (BPS)?

Since Jan 2015, the SPS has been superseded by Basic Payment Scheme (BPS).

The Basic Payment Scheme (BPS) is the biggest of the European Union’s rural grants and payments to help the farming industry. Farmers apply once a year - normally in May - and payments begin in December.

Single Payment Entitlements which a farmerhas registered in his/her name on 31st December 2014 were “rolled-over”to become their allocation of Basic Payment Entitlements on 1st January2015.If a farmer held more Entitlements than the area on which he/she claimed in 2015, the surplus Entitlements were extinguished. Entitlements can now be transferred online via the Rural Payments website, providing a next day transfer service. A claimant must activate ALL their entitlements at least once every two years to prevent losing them. Farmers can get more entitlements by buying or leasing them from other farmers. Some businesses aren’t allowed to claim if they carry out certain business activities.

Who’s it for?Farmers with at least 5 hectares of agricultural land (used to be 1 hectare) and 5 ‘entitlements’ can apply. The payment for 2016 can be found here: https://www.gov.uk/government/news/rural-payments-agency-confirms-entitlement-values-for-2016-basic-payment-scheme

A “Young Farmer ” top up payment is available for any claimant who is at least 18 years old but not more than 40 years old in the year of their first BPS application (i.e. they cannot become 41 years old within that calendar year), who took control of the holding for the first time on 1stJanuary 2011 or later. Their Basic Payment will be topped-up by up to an additional 25% for the first five years after they started farming or took control of the business. This top-up will apply on up to 90ha only. To qualify, a ‘New or Young Farmer’ certificate must be completed by a solicitor or accountant to confirm they have seen documentary evidence that the claimant qualifies.

The UK is also required to apply “Degressivity” which reduces the Basic Payment element of a claim by 5% for those claiming on approximately 1,000 hectares (farmers receiving over € 215,000 in total payment) Member States have the Flexibility to impose up to 15% voluntary modulation (replacing the previous National Voluntary Modulation set at 9% in England, and was in addition to 10% EU modulation). The effect of this ongoing modulation will be to move funds from Pillar 1 (Basic Payment) to Pillar 2 (Rural Development Regulation) providing supplementary funding for Environmental Stewardship Schemes to encourage good uptake. DEFRA has determined to apply a 12% transfer with effect from 2014, and is likely to increase the transfer rate from 12% to 15% in 2018. Therefore, modulation under the new scheme will commence at 22%.

New to the 2016 claim year is the requirement for the Rural Payments Agency to gather details on the Accountable People behind each BPS claimant. These are the people who make decisions about how the business is run and who share in the profits or losses of the business i.e. those taking the financial risks (only people meeting both criteria are deemed to qualify).

Accountable people include:

• Sole traders

• Partners

• Directors – but only if they share in business profits and losses

• Major shareholders - i.e. those holding more than 10% of shares in a company

• Trustees and executors – but only if they share in business profits and losses (which one expects would rule out most Trustees and executors)

Accountable people will not need to be registered on the RPA’s online system but their name, National Insurance number and the percentage share/voting rights in the business will need to be provided.

What do I need to do?There are some rules about what you can and can’t do with your land if you claim BPS. If you’re an arable farmer you might need to grow 3 different crops and use 5% of your land to do specific things that are good for the environment. Farmers will need to make decisions about what to do with their land so that they can follow the rules. If you claim BPS you must also follow the cross compliance rules.

How do I apply?It’s too late to apply for BPS in 2016. The next time you can apply will be in 2017. Read the BPS 2017 page for the latest news.BPS 2017